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FTSE 100 closes higher midweek as equities rebound on trade deal hopes

Britain's blue chip benchmark closed almost 30 points higher, or 0.41% at 7,188 on the day

IXICO PLC - FTSE 100 to open fairly flat as investors struggle for direction ahead of UK services data
FTSE 100 closed nearly 30 points ahead after the losses seen Monday and Tuesday
  • FTSE 100 index ends day higher
  • US stocks gain
  • Sterling reaches seven-month high
  • US ADP jobs data disappoints

5pm: Footsie closes up

FTSE 100 index closed higher on Wednesday as equity traders were buoyed by trade headlines rather than put off.

Britain's blue chip benchmark closed almost 30 points higher, or 0.41% at 7,188.

The more UK company focused FTSE 250 also sped higher, up almost 146 points on the day, to finish at 20,646.

On Wall Street, stocks also gained ground, with the Dow Jones Industrial Average up over 214 points. The oil price also gushed higher, with US benchmark crude adding 3.74% to US$58.19 a barrel on hopes of US, China trade deal progress and expectations of further OPEC output cuts.

"Stock markets are busily engaged in the process of clawing back the losses from the first two days of the week," noted Chris Beauchamp, chief market analyst at online trading group IG.

"It was a busy day anyway, with PMI and ADP readings, but as ever trade headlines have stolen the show. This time around they have been of the positive kind, a marked contrast to the ‘fall out with everyone’ approach of the president on Monday, and for the moment they seem to have provided a shot in the arm for buyers.

"It is still too early to declare the great market correction of December 2019 over, but if it is, it will mark a triumph for this ongoing bull market and an indication of more to come as December grinds on towards Christmas."

4pm: Domestic stocks stronger than big-caps over election hopes

The FTSE 100 was staring at its feet in the afternoon, with the outlook falling as sterling stayed strong after being buoyed by trade optimism.

London’s blue-chip index dipped 12 points to 7,171, below the morning peak of 7,190 points.

Exerting pressure on the multinationals, the pound gained ground throughout the day, rising to $1.309 where it has since stayed, with positive noises made by President Trump over a US-China trade deal.

Sterling's best levels against the euro since May 2017 were the chief cause of the Footsie's underperformance versys European peers, said Michael Hewson, chief market analyst at CMC Markets.

“It has been notable though that UK focussed stocks have outperformed with the FTSE 250 posting decent gains on rising optimism that the Conservatives may well be able to eke out a majority at next week’s election.”

Among the FTSE 250’s top risers were banking firms Lloyds (LON:LLOY) and RBS (LON:RBS), as well as housebuilders Taylor Wimpey (LON:TW.) and Barratt Developments (LON:BDEV), and energy companies United Utilities (LON:UU.) and SSE (LON:SSE).

The companies are gaining as the chances of a Labour government taking power continued to look less likely in the run-up to next week’s UK election.

Earlier today, a survey by pollsters ICM reckoned the Conservative party are ahead of Labour by seven percentage points on 42% to 35%.

Across the pond, Wall Street continued to look upbeat, cresting up 186.8 points to 27,689.6, although Hewson cautioned that traders should watch out before getting too excited about Trump’s latest trade comments:

“Gut feeling suggests that this is a false narrative, however until we get past 15th December markets have to pay attention to it, despite many previous false dawns.”

Post for London’s blue-chip index, with the results due of the latest three-month FTSE indices review determining who stays and who goes.

3pm: Trump says trade negotiations with China are “going very well”

Traders went into a flurry of excitement as President Trump said trade negotiations with China are “going very well”, raising market hopes for a phase one trade deal to roll back tariffs,

The FTSE 100 bounced 15 points higher to 7,173.2 on renewed optimism, and across the pond in the US, the Dow Jones Industrial Index went soaring more than 200 points to 27,702.8.

“Discussions are going very well and we’ll see what happens,” Trump told reporters at a meeting of NATO leaders near London.

The President changed tack after yesterday saying that a deal might have to wait until after next year’s US election in 2020, sending stocks plummeting.

“It still baffles me that investors hang on every Trump statement and tweet,” said Craig Erlam, senior market analyst at OANDA.

“His trade deal optimism changes on a near-daily basis and yet, investors are very sensitive to it. It's probably a reflection of the relative lack of other talking points.”

2pm: US employment "signals no relief" over next couple of months

The FTSE 100 lost most of its morning advances as the pound kept up its strongest rally in months.

The blue chip index shuffled lower to 7,163 points, chasing a return to morning highs of 7,188 points.

Sterling continued to rally towards $1.31, its highest value since May, based on reports that US and China are closing in on a trade deal to roll back tariffs.

Nevertheless, US stock market futures kept climbing towards Wall Street open, despite poor employment data coming out from the US.

The ADF reported that in November, private companies hired 67,000 new workers, under half the expected figure of 135,000, which is a bad omen for the weekly jobless figures and non-farm payrolls looming on Friday.

Ian Shepherdson, chief economist at Pantheon Macroeconomics said: “This is not about supply-side constraints, with firms unable to find all the people they want; labor demand clearly has weakened as the trade war has dampened activity, both directly via the cost of the tariffs and indirectly by creating great uncertainty for businesses.”

“One bad month is not a trend, but the forward-looking surveys signal no relief over the next couple of months, at least.”

Shepherdson also warned that “the consensus for Friday, 190K, now looks much too high; we’re at 120K.”

“Friday’s official payroll number likely will be stronger than ADP, because it will be boosted by the return to work of the 46K GM strikers; this had no direct effect on ADP’s measure because GM does not use their payroll processing services.”

12.10pm: US looking for a rebound

The FTSE 100 index held gains at lunchtime with Wall Street is looking to rebound higher on Wednesday as hope that US-China phase one trade deal could be reached returned.

The UK blue-chip index was up around 16 points at 7,175, though that was below the morning peak of 7,190.04.

Market watchers are expecting US indices to open in the green today, with the Dow Jones Industrial Average seen ringing in 110 points higher at 27,612 as the trade talks pendulum swung back into positive territory.

The Dow ended 1% lower yesterday after President Trump said at a news conference in London that he had “no deadline” for ending US-China trade talks, which have rumbled on for two years but have reportedly been picking up pace recently.

Jasper Lawler, head of research at LCG, said Trump’s latest comments have been “ominous for the phase one deal that markets had been pinning their hopes on”.

“We hadn’t expected any kind of deal to be completed in 2019, but Trump’s suggestion of “late 2020” is much later than the first quarter of 2020 we had pencilled in. China, for their part seems politically less able to strike a trade deal given the US bills on Hong Kong and now the Uighurs in Xinjiang,”

But, he added: “We tend to think Trump is talking tough and that phase one can still be done sooner than the end of 2020. There is a 'happy place' where China offers enough that Trump feels able to rollback some tariffs but we are not there yet."

11.20am: Footsie up and down on sterling frenzy 

The FTSE 100 didn't know where to go as sterling enjoyed a rally late morning on renewed confidence in a Conservative victory in the UK general election.

The blue-chip index was up 22 points at 7,181, after dipping almost back to the value at open, based on strong gains in the pound.

Sterling reached its highest price since May this morning, at $1.306 this morning before falling back slightly.

Pollsters reckon the Conservative party are ahead of Labour by seven points on 42% to 35%, according to a survey by ICM.

Many investors favour Boris Johnson’s party because it ups the chances of “getting Brexit done” with a deal, which would bring some certainty back to the economy.

Rupert Thompson, head of research at Kingswood, cautioned that there is still no certainty yet, saying: “While Johnson’s Brexit deal would almost certainly be ratified in short order if the Conservatives win, doubts will remain over whether the UK will be able to finalise a trade deal with the EU by the end of the transition period in December 2020.”

“The risk of a no-deal exit may be much reduced but it has not been eliminated altogether.”

He added: “If market hopes of a Conservatives victory are vindicated, the pound will very likely strengthen further from $1.30 currently to maybe $1.35 or so. Even at $1.35, the pound would remain below the levels seen prior to the 2016 Brexit referendum.

President Trump commented on the current Prime Minister while in London yesterday at a meeting of NATO leaders: “I think Boris is very capable and I think he’ll do a good job”.

10.45am: Markets hopeful for US-China trade deal

The FTSE 100 was holding steady as the trade talks pendulum swung to positive, continuing to whip up markets.

The UK benchmark index rose 18 points to 7,176.3, just a point below where it was an hour ago.

Miners Evraz, (LON:EVR) Antofagasta Holdings (LON:ANTO), and Glencore PLC (LON:GLEN) led the FTSE 100 risers.

Traders jumped into action after it was now reported that Washington and Beijing were close to agreeing a phase-one trade deal to roll back tariffs, despite choppy waters between the two nations recently after the US enacted a pro-Hong Kong protests bill.

This goes some way to reversing yesterday’s losses which came after President Trump said that a trade agreement with Beijing might have to wait until after the US presidential election in November 2020. He had, earlier in the day, also threatened tariffs on France and the European Union.

Josh Mahony, a senior market analyst at IG warned that Trump’s words “should be taken with a pinch of salt, as his comments are typically a negotiating tool to help push discussions in his favour”.

“Neither the US nor China are interested in overseeing another year of economic uncertainty, and with the impeachment hearing ongoing, there is no doubt Trump will be desperate to get a deal across the line to shift the focus ahead of the 2020 election.”

“Worryingly, with both Johnson and Corbyn promising to impose a tax on tech giants, it seems the US threats of tariffs on French goods could soon be levied on UK interests too,” he added.

9.45am: UK services not as bad as feared 

The FTSE 100 made up lost ground after opening in the red this morning, gaining as the all-important UK services sector PMI contracted at a slower pace than expected.

Around mid-morning, London’s blue-chip index was up 19 points at 7,178.

Good and bad news came from the UK’s services purchasing managers index for November, which arrived ahead of expectations for the second month running.

The reading nudged up to 49.3 from a reading of 48.6 previously, but nevertheless a reading below 50 still signals a contraction.

“As the last of 3 keenly viewed industry surveys in the past 3 days this rounds of the latest batch of leading indicators on the UK economy, leaving an overall impression of a slight improvement against a pessimistic backdrop, with activity on the whole remaining at subdued levels, “ commented David Cheetham, chief market analyst at XTB.

“The pound has made a break higher above the $1.30 handle, running up to levels not seen since May,” he added, saying that the election lead for the Conservatives “seems to be holding at around 10 percentage points and unless this narrows in the next week then it is looking increasingly likely that we will get a Tory majority”.

8.30am: Dull early progress

The FTSE 100 made a fairly flat start after Tuesday’s blood-letting which was prompted by an unpredictable President Trump opening multiple new fronts in the US trade wars.

The index of blue-chips nosed 8 points lower to 7,147.94 in the first half-hour of trade

WATCH: Investor Update: VR Education's ENGAGE platform to be included in new 5G VR device

Against the recent rather volatile backdrop, Michael Hewson, analyst at CMC Markets, is worried how the remainder of the month might play out.

“Last year December also saw a sharp sell-off before we get a strong rebound in the New Year,” he pointed out. “Could something similar play out here, given that the same problems facing investors weren’t that much different to the ones being faced now?”

More immediately, services sector data for November should tell us whether the UK is edging closer to recession or moving further from the economic precipice.

Looking at the market movers, Vodafone (LON:VOD) was given no credit for its link-up with Amazon Web Services as the shares fell 1.3% in the wake of the news.

Proactive news headlines:

MaxCyte Inc. (LON:MXCT) has inked a new development and commercialization agreement with KSQ Therapeutics, a biotechnology company using its proprietary CRISPRomics discovery platform to achieve higher probabilities of success in drug development. The terms of the agreement will see KSQ obtain non-exclusive clinical and commercial use rights to MaxCyte's cell engineering platform to develop multiple adoptive cell therapies. In return, MaxCyte is eligible to receive certain milestone payments in addition to other licensing fees.

IXICO PLC (LON:IXI) has achieved its first year of profitability since its admission to AIM in 2013. For the year ended 30 September, the neuroscience analytics firm swung to an underlying (EBITDA) profit of £500,000 from a £600,000 loss in the prior year, while revenues rose 40% to a record level of £7.6mln.

VR Education Holdings PLC (LON:VRE) is to launch a new 5G virtual reality (VR) device in partnership with Deutsche Telekom, US conglomerate Qualcomm Inc (NASDAQ:QCOM) and Taiwanese tech group XRSPACE. The VR technology firm said its ENGAGE platform, which allows users to construct virtual classrooms and other environments, has been selected as a launch application for the new VR headset, which is scheduled for release in the middle of next year.

Advanced Oncotherapy PLC (LON:AVO) is teaming up with one of America’s premier medical centres to assess the potential of the company’s proton beam technology. The two-year collaboration with the Cleveland Clinic will evaluate “the target conformity of proton mini-beams compared with x-ray stereotactic body radiation therapy”.

Supermarket Income Reit PLC (LON:SUPR) shares nudged higher on Wednesday as the group saw increased rents for two properties in its portfolio. The firm said a retail price index (RPI) rent review for its Sainsbury’s supermarket in Ashford, Kent, had resulted in the annual lease payment rising to £4.04mln from £3.93mln per annum. Meanwhile, a similar review for its Tesco superstore in Thetford, Norfolk, will see rents rise to £2.72mln from £2.64mln per annum.

OptiBiotix Health PLC (LON:OPTI) has announced the appointment of Mikkel Hvid-Hansen as European Sales Leader of its wholly-owned subsidiary, ProBiotix Health Ltd. The life sciences business – which is developing compounds to tackle obesity, high cholesterol, diabetes and skincare – noted that Hvid-Hansen is joining ProBiotix Health from a position as International Sales Manager from Cell Biotech Int., a Korean probiotic company selling bulk ingredients and finished products internationally.

Primary Health Properties PLC (LON:PHP) has inked an £8.4mln deal to providing funding for the construction of a medical centre in Eastbourne, England, as the property investor continues to grow its portfolio. In a statement, the FTSE 250-listed healthcare facility builder said that over 18,000 patients will benefit from primary care facilities to be built for two merged GP practices, and the property will be wholly-owned by PHP after completion.

PCF Group Plc (LON:PCG) has its sights set on a £1bn loan book after the specialist lender posted record numbers in its latest year. Loans outstanding rose 55% to £339mln with profits for the twelve months to September climbing by 54% to £8mln.

Alien Metals Ltd (LON:UFO) is buying a formerly producing Western Australia silver mine in a low-cost, all-share deal. The group is acquiring the Elizabeth Hill Silver Project from Karratha Metals Group. Alien is handing over 200mln shares valued at 0.14p each, or £280,000 in total. The stock comes with 50mln warrants attached that are in the money above 0.25p.

NQ Minerals PLC (LON:NQMI) made record profits from its Hellyer mine in Tasmania last month. Unaudited net profit before tax in November was A$2.44mln (£1.29mln) on revenues of A$5.64mln.

Premier African Minerals Limited (LON:PREM) has taken a 10% stake in a manganese mine MN Holdings after converting a loan into shares. MN owns the Otjozondu mine in Namibia, which is currently exporting 5,000 tonnes lump ore per month at better than 35% manganese with production set to increase, Premier said in a statement. The mine also has an exploration target of 30-50mln tonnes grading at 23%-27% Mn and in the year to June generated revenues of N$21mln (US$1.43mln).

Impax Asset Management Group PLC (LON:IPX) said it is “in good stead” to keep growing as widespread commitment towards a more sustainable economy “has never been stronger”. The AIM-listed company, which invests in projects focused on the transition to a more sustainable global economy, saw its assets under management (AUM) rise to a total of £15.7bn in the two months to 30 November, thanks to net inflows of £500mln.

Pembridge Resources PLC’s (LON:PERE) subsidiary, Minto Explorations Ltd, has received a US$3.7mln revenue payment as part of an offtake agreement with Japanese firm Sumitomo. The payment is for 1,793 dry metric tonnes of copper, gold and silver concentrate mined in November from the firm’s Minto project in Canada.

TomCo Energy plc (LON:TOM) has raised £925,000 through a share placing to support the company’s plans to advance oil and/or tar sands opportunities, along with the ongoing development and revision to its TurboShale system. The company is issuing 142.3mln new shares priced at 0.65p each. The placing was arranged by broker Turner Pope Investments. The placing shares come with warrants, one issued for every two shares, with an exercise price set at 1.5p. The placing comes as Tomco gains access to the Valkor oil sands opportunity through a joint venture in the Uintah basin, Utah, with engineering firm Valkor LLC.

Sunrise Resources PLC (LON:SRES) has flagged a delay to the mine permitting for the CS Pozzolan-Perlite project in Nevada, USA. The company, in a statement, told investors that the delay to completion has been caused by the Bureau of Land Management’s late introduction of additional information reporting requirements for the company’s supplemental environmental reports.

Genel Energy PLC (LON:GENL) has revealed that chairman Steve Whyte has resigned from the company with immediate effect. Earlier this year, in May, Whyte decided he would not stand for re-election at the 2020 annual general meeting. Whyte is being replaced by George Rose who is stepping up from his position as senior independent non-executive director to be Genel’s interim chairman whilst a permanent replacement is selected.

Bango PLC (LON:BGO), the mobile commerce company, has announced the appointment of two non-executive directors (NED). It said Sir Eric Peacock joins the company as senior independent NED, to guide and support the expected rapid growth of Bango as it builds on its global relationships and capitalizes on its data monetization technology. The group noted that Peacock has broad experience in a range of CEO, Chair and NED roles in public and private companies including Stage Technologies, Achieve Global, Halo Intl., and Babygro plc. The company also said Frank Bury has joined it as an independent NED bringing with him a career spanning 27 years in finance, having spent 12 years in the City of London and 15 years running venture investment partnerships in the tech and emerging markets sectors. He is currently a NED at Smartlogic, bio-tech innovator Domainex Ltd and at TS Lombard.

Benchmark Holdings PLC (LON:BMK), the aquaculture health, advanced nutrition, and genetics business, said that Malcolm Pye, who stepped down as its chief executive officer in August to become a non-executive director of the company, has decided to retire from the board with effect from today in order to pursue other opportunities. Benchmark’s board reiterated its thanks to Pye for his considerable contribution during his time with the group.

Ariana Resources PLC (LON:AAU), the AIM-listed exploration and development company, said it has been informed that further to a purchase of 460,000 ordinary shares in the company on 29 November 2019, Stephen Bingham now holds 32,110,000 ordinary shares,  representing a holding of 3.03% of the group’s total issued share capital.

6.45am: Flat start predicted 

The FTSE 100 is expected to open almost flat on Wednesday as investors seem to be looking for some direction in the form of the UK’s services data.

Spread-better IG is expecting the FTSE 100 to open less than 1 point higher after the index tumbled 127 points on Tuesday to close at 7,158.

Traders are struggling to find any signs of positivity following indications from US President Donald Trump yesterday that a trade deal with China may not be as near as previously anticipated, and may not be agreed until after the presidential election in November 2020.

CMC Markets’ Michael Hewson said the next test of the markets will be on 15 December, when the next round of US tariffs on Chinese goods are due to take effect.

The renewed trade uncertainty drove US indices lower overnight, with the Dow ending Tuesday’s session 1% lower at 27,502 while the S&P 500 sank 0.66% to 3,093 and the Nasdaq fell 0.55% to 8,520.

Asian markets were also suffering from the darker trade picture on Wednesday morning, with the Japanese Nikkei 225 falling 1% while Hong Kong’s Hang Seng was also down 1%.

However, while global trade has left investors uncertain as to how to move forward, the latest UK services PMI could provide catalysts for movement when it is released later today.

“In the UK we’ve also seen slight improvements in both manufacturing and construction data this week, albeit from very weak levels, and there is some optimism that the real driver of the economy, which is the services sector will also show evidence of a pick up after last week’s flash number showed a fall into contraction of 48.6, the worst reading since July 2016”, Hewson said.

A more favourable reading could provide a boost to the pound, which is currently trading mostly flat against the dollar at US$1.2992.

There will also be another batch of data from across the Atlantic with US non-manufacturing and services PMIs later today.

Significant announcements expected for Wednesday:

Finals: IXICO PLC (LON:IXI), PCF Group Plc (LON:PCF), Stock Spirits Group PLC (LON:STCK), Impax Asset Management Group PLC (LON:IPX)

Interims: Loungers PLC (LON:LGRS), Quiz PLC (LON:QUIZ), SDCL Energy Efficiency Income Trust (LON:SEIT), VP PLC (LON:VP.)

Economic data: UK Services PMI, UK Composite PMI, US Services PMI, US Composite PMI, US Non-Manufacturing PMI, US ADP employment rate

Around the markets:

Sterling: US$1.2992, no change

Brent crude: US$61.28 a barrel, up 0.76%

Gold: US$1,480.25 an ounce, up 0.14%

Bitcoin: US$7,146.39, down 2%

City headlines:

Larry Page and Sergey Brin are stepping down as chief executive and president of Alphabet, respectively; Sundar Pichai, Google’s chief executive of the past four years, will replace Page as chief executive of Alphabet – Times

A spate of mining deaths at Glencore has "shocked the business to the core" and sparked determined efforts to improve safety, Peter Freyberg, the company's head of industrial assets, told investors – Telegraph

Goldman Sachs is advising clients to stop buying Aston Martin Lagonda shares – Times

Hipgnosis said it had snapped up worldwide income rights held by Fraser T Smith to 298 songs, including several UK and US number one hits – Daily Mail

Black Friday helped John Lewis ring up its best-ever week of sales with a 9.5% rise over 10 days – Guardian

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